Categories of Innovation


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Types of Innovation, Adopter Categories and Stages in adoption process

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Categories of Innovation

  2. 2. DEFINITION OF INNOVATION The process of translating an idea or invention into a good or service that creates a value or for which customers will pay. In business, innovation often result when ideas are applied by the company in order to further satisfy the needs and expectations of the customers.
  3. 3. CATEGORIES OF INNOVATION • Evolutionary Innovation that are brought about by many incremental advances in technology or processes. • Revolutionary Innovations which are often disruptive and new.
  4. 4. FIRM ORIENTED DEFINITION A Firm oriented approach treats the newness of a product from the perspective of the company producing or marketing it. When the product is “new” to the company, it is considered new.
  5. 5. PRODUCT ORIENTED DEFINITION Product oriented approach focuses on the features inherent in the product itself and on the effects these features are likely to have on consumers’ established usage pattern.
  6. 6. TYPES OF PRODUCT INNOVATION • Continuous Innovation has least disruptive influence on established patterns • Dynamically continuous Innovation is more disruptive than a continuous innovation but still does not alter established behavior patterns Eg: Digital cameras, MP3 players, USB drives • Discontinuous Innovation to adopt new behavior patterns. Eg: Airplanes, Radios, TVs, Automobiles
  7. 7. MARKET OREIENTED DEFINITION Market oriented approach judges the newness of a product have to the new product. Two market oriented definitions used in consumer studies: • A product is considered new if it has been purchased by a relatively small (fixed) percentage of the market • A product is considered new if it has been on the market for a relatively short (specified) period of time
  8. 8. PRODUCT CHARACTERISTICS THAT INFLUENCE DIFFUSION Characteristics Definitions Relative Advantage Degree to which potential customers perceive a new product as superior to existing substitutes Compatibility Degree to which potential consumers feel a new product is consistent with their present needs, values and practices Complexity Degree to which a new product is difficult to understand or use Trial ability Degree to which a new product is capable of being tried on a limited basis Observability Degree to which a product’s benefits or attributes can be observed, imagined or described to potential customers
  9. 9. TYPES OF INNOVATION Receptive Innovation Use traditional marketing and alliance strategies Resistant Innovation What is the goal of diffusing the innovation? Industry goal why? Consider horizontal cooperation/ competition with other industry players Purely competitive advantage for the company? Consider vertical cooperation with suppliers or distributors
  10. 10. ADOPTER CATEGORIES • Consumer Adopter Category 1: INNOVATORS • Consumer Adopter Category 2: EARLY ADOPTERS • Consumer Adopter Category 3: EARLY MAJORITY • Consumer Adopter Category 4: LATE MAJORITY • Consumer Adopter Category 5: LAAGARDS
  11. 11. STAGES IN ADOPTION PROCESS Name of Stage What happens during this stage Awareness Consumer is first exposed to the product innovation Interest Consumer is interested in the product and searches for additional information Evaluation Consumer decides whether or not to believe that this product or service will satisfy the need- a kind of “mental trial” Trial Consumer uses the product on a limited basis Adoption (Rejection) If trial is favorable, consumer decides to use the product on full rather than a limited basis- if unfavorable, the consumer decides to reject it
  12. 12. THANK YOU